HSBC India Completes Its First Blockchain-Enabled Trade Finance Deal
November 6, 2018 by Akshay Makadiya
HSBC India and Dutch multinational bank ING Group have successfully performed India’s first blockchain-powered trade finance transaction. That trade has proven that blockchain-based transactions can bring much-needed efficiency to the financial sector.
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Toward Speeding Up Trade
HSBC India and ING Group have facilitated a blockchain-based trade finance deal between India’s largest publicly-traded company, Reliance Industries Limited (RIL), and U.S.-based Tricon Energy.
The financing deal relied on R3’s blockchain Corda, which was then meshed with trade digitization solutions provider Bolero’s Electronic Bill of Lading platform.
Using Corda, ING Group issued a letter of credit to HSBC India, the advising and negotiating bank for RIL, to process a shipment from India to the United States.
“The use of blockchain offers significant potential to reduce the timelines involved in the exchange of export documentation from the extant seven [to] ten days to less than a day,” RIL joint chief financial officer Srikanth Venkatachari noted of the deal.
Conventionally, export documents have been couriered to each party involved in a trade finance transaction, a dynamic that has created time-consuming and expensive paper trails. The hope is that digitizing such documents using blockchain can significantly boost efficiency in the sector.
“This transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation,” HSBC India said in a statement.
Some ‘Blockchain, Not Bitcoin’ Movement in India
Cryptocurrency exchanges may presently be in limbo in India, but blockchain embraces are seemingly becoming more widespread in the nation in kind.
Recently, India’s second-biggest software exporter Infosys Limited formed a DLT-based trade finance network in collaboration with seven domestic private-sector banks. The project comes as a bid to increase efficiency and overcome fraud in the traditional finance sector.
Indian Banking giant ICICI also recently developed a blockchain-powered trade finance platform. In May 2018, ICICI reportedly onboarded 250 large enterprises to leverage the platform for international trade finance.
Will blockchain technology become a standard for international trade transactions in the next five years? Share your views in the comments section.
Images via Pixabay